Auto sector growth rate 3% in 2008-09

Auto industry has witnessed a modest growth of three per cent in the year 2008-09. It was 13.6 per cent in 2006-07 while it fell into red (-2.3%) in 2007-08. These figures were disclosed during the presention of Economic Survey in Parliament on Thursday. Although auto industry production grew at a CAGR of 11.5 per cent over the last five years. Auto sector turnover crossed Rs 2 lakh crore in the last fiscal whereas the industry employs 10.5 million people, directly as well as indirectly. "The industry has a strong multiplier effect on the economy due to its deep forward and backward linkages with several key segments of the economy," a finance ministry statement said. The automobile industry, which was plagued by the economic downturn amidst a credit crisis, managed a growth of 0.7 per cent in 2008-09 with passenger car sales registering 1.31 per cent growth while the commercial vehicles segment slumped 21.7 per cent.

Car co experiencing growth in June too

The car companies are enjoying growth in the consecutive seventh month, June. Thanks to the new car launches and low interest rate on auto loans. Maruti Suzuki continued its strong performance by selling 61,773 vehicles in th month which is 10 per cent more than in the same period last year. It also posted a three-fold increase in exports to 13,336 vehicles , taking its June tally 75,109 units. Robust exports helped Hyundai Motor India post 18% increase in sales in June to 47,267 cars. Tata Motors posted flat sales at 17,039 cars in the month compared with 17,017 units sold in June last year. Sales of the Indigo sedan declined 26% to 3,522 units in the month. Utility vehicle Sumo and Safari declined 11% to 3,307 units last month. Mahindra and Mahindra’s (M&M ) domestic sales jumped 24% to 22,526 units in June. Honda Siel Cars recorded a 6.5% increase in sales to 5,039 units on the back of the 2,032 dispatches of its newly launched Jazz hatchback to dealers.

Car co joy ride: export to Europe increased

Indian car companies making profit from incentives offered by the government of France, United Kingdom and Germany. These incentives are provided to the fuel efficient vehicles. Hyundai Motor India recorded 33% growth in exports in June to 24,241 cars Maruti to export 2 lakh cars in FY10, up from 70,000 cars the company exported in FY09 Toyota, General Motors and Ford are looking at a possible debut in compact cars segment. “Our parent Suzuki Motor’s distribution network in Europe is clogged with bookings,” Maruti’s executive officer (sales & marketing) Mayank
Pareek said. Maruti aims to export 2 lakh cars in FY 10 from the 70,000 cars it exported in FY ‘09. Eyeing the potential, Toyota Kirloskar Motor, the Indian unit of Japan’s Toyota Motor, has increased investment by an additional Rs 800 crore, taking it to Rs 4,000 crore till 2016 in its small car manufacturing facility near Bangalore. “The Indian subsidiary will play a larger role in global operations. Besides the domestic market, our small car coming next year will also cater to several overseas markets,” said a TKM executive, requesting anonymity.

High-end cars to be priced a little lower

The Union Budget 2009-10 has given a chance to own luxury items at lower prices due to proposed cut in taxes and duties. The auto sector has also been provided with some great announcements like excise duty cut on big cars. As soon as the news spread, several auto makers has promised to reduce the prices of the big cars. Mitsubishi has taken the lead by announcing price cut of Rs 6,000 on its Pajero, Outlander and Montero cars. Responding in the same spirit While BMW, General Motors and Toyota said they would pass on the benefits of excise cut, Tata Motors said it would soon announced its decision on it. "We will pass on the benefits of this excise duty cut to our customers immediately," General Motors India Vice President P Balendran told reporters. Another carmaker Toyota Kirloskar Motor (TKM) would also react according to the Budget's proposal. "We have always been passing on all benefits to the customers, which we get from the government. Though this cut is very minimum, still we will pass on this," TKM Deputy Managing Director (Marketing) Sandeep Singh said.

Now Honda and Ford reduced its car prices

After Mitsubishi's cut prices of its high-end cars after excise duty cut on large cars, Ford and Honda joined in the rally. Both the carmkers reduced the prices of their cars by up to Rs 6,000. Ford India announced a price cut of Rs 6,000 for its sport utility vehicle (SUV) 'Endeavour'. While Honda Siel Cars India (HSCI) cut the prices by Rs 5,000 for its luxury sedan 'Accord' and SUV 'CR-V'. Following the price cuts, Honda's Accord would now be available between Rs 17.72 lakh and Rs 24.80 lakh. Its CR-V would now come at Rs 22.92-Rs 23.62 lakh. GM India, Toyota Kirloskar Motor and BMW had also said they would pass on the benefit of excise cuts to consumers. The government had proposed to reduce the additional excise duty on big cars with engine capacities of 2,000 cc and above by Rs 5,000 per unit in the Budget for 2009-10.

Hyundai, Tata and Maruti plans to hire engineering talent from Detroit

India’s largest carmaker had sent a team to Detroit to shop for talent. It bagged 10 engineers so far, two of them expats. Maruti also plans to hire around 500 people in managerial capacity in the next financial year. Sunil Goel, director of GlobalHunt India, said there is a serious shortage of skilled manpower in India, which has forced these companies to look outside. Arvind Saxena, senior VP (sales and marketing) said, "We have always believed in hiring the best and if this means extending the boundaries to include those living outside India, we are open. I am sure this will be a good opportunity for many Indians as well, who want to come back home. It will be an excellent opportunity for us too since we will be able to get experienced people, who have a wealth of knowledge and experience in international markets." Volkswagen Beetle and Mitsubishi Lancer Evolution X are the upcoming cars in India.